P2P Lending Platform News Round-up (30th June 2016)

Last post: Jul 7, 2016

Since the outcome of the EU Referendum was announced, many of the major P2P sites have emailed investors to offer reassurance that Brexit will not affect their operations but who can say for certain? Meanwhile FundingKnight have entered administration only to be “rescued” by GLi Finance – the institutional investor that abandoned the platform in February.

Totals lent to date (30th June 2016)

*All data correct at the time this blog was compiled. Due to The Secret Investor being on holiday, 3 weeks have passed since the last blog therefore the average fortnightly growth has been calculated for this period.

LOANS TO BUSINESSES

Assetz Capital – £117,856,173

Funding Circle - £1,340,711,120

FundingKnight - £30,835,000

FundingSecure - £43,787,893

Money & Co – £6 million approx

Rebuildingsociety – £9,818,421

ThinCats - £182,150,000

Invest and Fund - £1 million plus

LendingCrowd - £4.5 million

ArchOver - £19,207,000

PERSONAL P2P LENDING

Zopa - £1,420,000,000

RateSetter - £1,277,141,927

Lending Works - £29,928,896

…………..

LOANS TO BUSINESSAssetz Capital

Lent to Date: £117,856,173 – average fortnightly increase of £1,458,667 – 1.26% growth. Having set new records in early June, the remainder of the month was quieter for Assetz Capital although a steady throughput of loans has continued. When this blog was compiled the pipeline continued to look quite healthy with 50 loans listed, a couple of which were imminently due for drawdown.

Highlighted Loan: A landlord of commercial premises was looking to raise £1.72 million to replace an existing bridging loan and also to pay off some debt. The borrower previously ran an electronic waste recycling business but went bust when bigger organisations squeezed him out. As CCJ's were issues, conventional finance options were unavailable. The income from the units that are rented seems reasonably secure especially as the core tenant has an agreement in place that extends beyond the lifetime of the loan. It is good that alternative finance allows those who find themselves in these sort of circumstances to raise funds however, as the loan is interest only, I would have wanted a return well into double figures – rather than the 9% pa – before I got involved.

Platform News: Assetz Capital have released details of a "stress test" recently undertaken against those accounts they offer which are covered by Provision Funds. Using procedures which the Bank of England requires banks to undertake. Their conclusion was that the size of the Provision Funds were 4 times larger than they needed to be to cope with the scenarios in the tests. They have used these results as justification for withdrawing the initial seed capital they provided when the Provision Funds were set up.

Funding Circle

Lent to Date: £1,340,711,120 – average fortnightly increase of £19,224,427 – 1.47% growth. This has been a very quiet month for FundingCircle with the fortnightly average never exceeding £20 million (this is still an amount that many other sites can only dream of). There were 42 auctions taking place when this blog was compiled although many were fully funded and closed to further bids. Secret Investor's Activity: This remains the site which I have the most exposure to because they have the largest number of loans listed. Below are highlights from my activity in the past fortnight:

Highlighted Loan Invested in:

Loan of £63k to enable experts in medical lasers to expand their business (C risk rating, 11.9% pa return). Having been a service company, the business had moved into sales and the funds were required to continue to expand into that area. The risk of course is whether this expansion will continue – 11.9% is the minimum rate I would want when investing in this sort of proposition.

Highlighted Rejected Loan:

Loan of £153k to jewellers requiring expansion capital (E risk rating, 17.7% return): The loan was required to purchase stock for an upcoming exhibition. The borrower had a consistently poor credit rating and had also taken out £170k of lending in the past 12 months. It gave me the sense that the business was on shaky ground and if the exhibition was not a success, it would fold. While risks have to be taken to earn a return of 17.7%, I felt the risks were too great in this instance.

Defaulted Loan: One of my borrowers has not been keeping up with repayments so FC have defaulted the loan. At present, this is a £50 loss for me. We'll see what happens with the recovery process. This is the only default I have recorded in the past 3 weeks across all platforms.

FundingKnight

Highlighted Loan: A fitness centre and spa was looking to raise £123k to fund further expansion. Although there was a company guarantee and a personal guarantee neither were backed by property and, because of this, Funding Circle turned down a loan application from this borrower even though they have an existing loan on that platform. As the business is fundamentally sound, Funding Circle had no issues with another loan being taken out on another platform. With the less than ideal level of security, the reserve interest rate of 11% pa seemed a little on the low side.

Platform News: FundingKnight have entered administration but – surprise, surprise – GLi Finance have stepped in to rescue them. GLi used to be the biggest institutional investor in FundingKnight loans but withdrew their support back in February. One wonders whether this take over was the "end game" when the withdrawal took place. GLi believe they can grow the platform – they have committed £1 million of capital to achieve this. The company's statement says that investors can expect to see a wider range of loans listed on the platform in future.

FundingSecure

Lent to Date: £43,787,893 at the end of May. Monthly growth of £6.7 million (18.11%).

Total lent to date is updated monthly.

Highlighted Loan: While most loans are now bridging loans, a returning borrower is looking to raise £273k with security offered against microsculptures which are valued at £900k. These sculptures, the work of Willard Wigan MBE, are incredibly tiny. They are mounted in the eyes of needles, on pin heads and even on eye lashes. Due to the difficulties in producing them, it is easy to see why they are valued at close to £1 million.

Defaults: One of the loans I have invested in is on the brink of being defaulted. With security held against a copy of the Magna Carta, hopefully a buyer will be found.

Money & Co

Lent to Date: £6 million approx. (latest available figure)

When this blog was compiled there was 1 auction taking place.

Highlighted Loan: A financial planning and advisory firm was looking to raise £455k to take over a business in the same arena. The manager director has impressive credentials having served a term as the President of the Institution of Financial Planning. The indicative rate of return is 8% while security is provided by a first charge debenture over the business and a personal guarantee.

rebuildingsociety

There were 2 active auctions when this blog was compiled. Highlighted Loan: Producers of gluton free foods returned to the platform to raise £295k to consolidate debt and replace an expensive Trade Finance facility. This application prompted another feisty debate from the usual small number of very active ReBS Lenders. This centred on the high number of late repayments from the borrower for their existing loan – albeit they had only missed the deadlines by a few days. On investigation by ReBS staff, these turned out to be due to delays in the banking systems processing the standing orders rather than the fault of the borrower. There were other risks relating to this loan, not least the fact that the security on offer didn't cover the capital requested. ReBS believed the strength of the business which supplies many of the main supermarkets and has an ongoing expansion plan mitigated these risks. I invested a very small amount at 17% pa.

ThinCats

It has been a busy 3 weeks for ThinCats with an average fortnightly increase of almost £5 million. When this blog was compiled, 5 auctions were active.

Highlighted Loan: A returning property developer was looking to raise £130k to fund his next project. The loan is interest only and this will be paid at 11.5% pa. Quite a high level of security was available with a first charge over the property being developed, a second charge over another property in the borrower's portfolio and a personal guarantee.

Invest & Fund

Lent to Date: Over £1 million

There were 0 auctions taking place when this blog was compiled

Highlighted Loan: The only fresh investment opportunity in recent weeks was the renewal of an existing bridging loan for a property on the South Coast. The borrower was looking to raise £270k over a term of 6 months. The return was 11% pa.

LendingCrowd

Lent to Date: Over £4.5 million as of the end of January.

There were 2 auctions taking place when this blog was compiled.

Highlighted Loan: Confectioners were looking to raise £55k of expansion capital. This is already a profitable business that has just signed an exclusive licensing agreement with a well-known social media game to produce branded candy and chocolates. This seemed to be a "crushingly" good deal! The term is for 3 years and I made a bid at just under 12% pa. In fact, I thought this loan was so "tastie" that I added extra funds to my LendingCrowd account so that I could lend my maximum of £80.

ArchOver

Highlighted Loan: Having successfully raised £750k at the end of May, research chemists returned to ArchOver looking for a further £300k to progress with the installation of a state of the art refrigeration unit. As with the previous capital injection, a return of 8% pa was offered with a high level of security due to accounts receivable being maintained at 125% of the value of the loan and insurance provided by CIFS. The low risk is underlined by the fact that no loans have defaulted on this site.

INVESTUP PORTFOLIO

Despite listing loans from numerous platforms, there were only 9 auctions taking place when this blog was compiled. Many were from sites covered elsewhere in this blog – reBuildingSociety, ThinCats and ArchOver.

PERSONAL P2P LENDING

Zopa

Lent to Date: £1.42 Billion – latest figure available.

Returns: Zopa's 3 accounts offer 3.5%, 4.3% and 6.7% pa depending on the levels of access and whether or not they are covered by the Provision Fund. Zopa distribute investor's money mostly to unsecured consumer loans.

Ratesetter

Returns: Interest rates are set according to supply and demand. They currently range from 2.8% to 5.9% depending on the length of the investment. These figures tend to fluctuate by no more than a few decimal places. Capital is covered by a Provision Fund. Ratesetter proudly boast that no investor has lost a penny since they launched in 2010.

Lending Works

Returns: 4.7% and 5.8% for 3 and 5 year investments respectively – the latter seems to be on a gradual downward trend having reduced by 0.3% in the past 5 weeks. As well as a Provision Fund to cover investor's finances, this site also insures borrowers against redundancy, fraud, illness and accidents making this a very fair site for all concerned.

****Disclaimer: This blog contains the views of the Secret Investor. Your capital is at risk when lending via all P2P Platforms. You're recommended to speak to a qualified Independent Financial Advisor.

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